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Old 29th January 2021, 02:19 PM   #321
Leftus
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Originally Posted by Suddenly View Post
Well, yes. That is how psychology works. Sometimes it is stupid, but short selling is literally wanting a company to crash and for the vast majority of people that is a hateful desire no matter what abstract arguments about market efficiency exist.
It's not them wanting them to crash, it's expecting them to. Game Stop is in a serious decline and may not make it to 2022, short sales or not. Since a large portion of games are sold digitally, they make less and less sense going forward.
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Old 29th January 2021, 02:23 PM   #322
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Originally Posted by lobosrul5 View Post
I believe its common thoughtthat a mortgage lender gets the collateral for the loan (ie your house), but beyond that you can walk away. In reality thats only true in 12 states. Although given that 2 are Texas and Cali, it is true for a lot of people.
And, for clarity, let's emphasize a point I think you mentioned earlier. This is in foreclosure situations, the bank has taken your house. If you're underwater in your mortgage, making your payments, and simply want to sell, that's a different story.
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Old 29th January 2021, 02:33 PM   #323
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Originally Posted by RecoveringYuppy View Post
And, for clarity, let's emphasize a point I think you mentioned earlier. This is in foreclosure situations, the bank has taken your house. If you're underwater in your mortgage, making your payments, and simply want to sell, that's a different story.
Well, yes. Although if you sold your house for $200,000 and owed $220,000 then you'd have to make up the difference... at least in a recourse state. I'm a bit puzzled how that would work in a non-recourse state. If non-recourse only applies in a foreclosure I don't know (probably else people could sell their house at a loss just to stick to the bank if they so chose to do so). Thats half the reason the last financial crisis was so bad, people were getting loans with little to nothing down, so even a small decrease in value in their home left them owing more than the homes worth. The other part were complicated and highly volatile mortgage derivatives. Even derivatives with derivatives as the underlying asset were out there if I'm not mistaken. That kind of goes to dudalb's point, there's this seemingly unnecessary undercurrent of complexity where if things go majorly wrong the taxpayer is left holding the bag lest the whole system collapses.

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Old 29th January 2021, 02:43 PM   #324
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Originally Posted by lobosrul5 View Post
Well, yes. Although if you sold your house for $200,000 and owed $220,000 then you'd have to make up the difference... at least in a recourse state. I'm a bit puzzled how that would work in a non-recourse state.
It won't work unless the bank agrees. And they aren't at all likely to agree in the situation I mentioned (one where you are still making your payments). They are only going to agree to the short sale if you've demonstrated some distress.
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Old 29th January 2021, 02:46 PM   #325
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Originally Posted by RecoveringYuppy View Post
It won't work unless the bank agrees. And they aren't at all likely to agree in the situation I mentioned (one where you are still making your payments). They are only going to agree to the short sale if you've demonstrated some distress.
Oh thats right you cannot transfer title to another party if there is a lien (ie mortgage) on it.
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Old 29th January 2021, 03:21 PM   #326
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Check out "Strategic Default" It was quite the thing back around 2009. People owing 300k on a home mortgage with the property's market value at 200k just stopped paying their mortgage. Even though they were earning a lot of money and could afford the payments.

And then they got to live there for many months rent/payment free before the banks foreclosed.

So they eventually got kicked out and moved to a rental for a few years. Then bought another home as the market started to recover. Since they had saved more than 100k by the strategic default. they were in a much better position year later than the shlub that kept paying his mortgage. They did take a hit in credit ratings so the impact of that has to be weighed against the savings of 100k+.

https://www.investopedia.com/terms/s...ic-default.asp
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Old 29th January 2021, 05:02 PM   #327
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Originally Posted by mumblethrax View Post
Which hedge fund gets screwed by that?

Seems like they've moved on from populist retribution to...something else.
That was meant for the OP in the "Too late to buy Gamestop stock?" thread that was combined with the "Wall street bets" thread.

No hedge funds were targeted with the DogeCoin push as far as I know.
This one was worth .02 cents today Jan 29th. Not worth the risk trading it tomorrow though IMO.
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Old 29th January 2021, 06:18 PM   #328
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shorting > 100% is bad for you, seems to be the lesson being taught to shorters here.
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Old 29th January 2021, 06:41 PM   #329
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That fabled invisible hand of free market is pretty visible today, indeed. snicker



Originally Posted by lomiller View Post
The argument amounts to suggesting that with an overvalued share price *may* be able to "save itself" by selling it's own stock at an unreasonably high price."
No. My argument is that shortsellers have very big financial incentive to be lying scumbags. You are very visibly ignoring moral hazard involved with this activity.

Your argument is also BS for different reason - there are companies that are doing well, yet they are target of shortsellers for whatever reason*. Examples are Apple or Tesla.

* In these cases most probable motive of someone financing this kind of thing is depressing price of stock.
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Old 29th January 2021, 07:13 PM   #330
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Originally Posted by p0lka View Post
shorting > 100% is bad for you, seems to be the lesson being taught to shorters here.

If some entity with sufficient resources had acted quickly, this could have been much worse for any unhedged shorts.
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Old 29th January 2021, 09:10 PM   #331
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Originally Posted by Modified View Post
If some entity with sufficient resources had acted quickly, this could have been much worse for any unhedged shorts.

I would argue that 1 million or so randos on a Subreddit, acting more or less as a single entity, have sufficient resources . . . If they were allowed to use them. When the brokerage firms (their clearing houses really) severely limited their ability to buy, they essentially handicapped that entity.

Whether or not the randos should have been doing what they were doing is neither here nor there. On the other side, should the short-sellers really have been shorting a stock at 120+%? They do that all the time because no one really notices but it’s an extremely risky situation for them if someone does happen to notice. Similar risky business crashed the global economy in 2008. So no, they really shouldn’t have been allowed to short GME so heavily.

Someone noticed it this time, but the game is rigged for the Big Boys to win. They should have lost in 2008 and learned a lesson but we bailed them out. The Little Guys got screwed big time. This is an opportunity for the Little Guy (a bunch of them anyway) to come out ahead. David could have toppled Goliath already but God is on Goliath’s side now.
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Old 29th January 2021, 09:24 PM   #332
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Originally Posted by xjx388 View Post
I would argue that 1 million or so randos on a Subreddit, acting more or less as a single entity, have sufficient resources . . .
Sufficient resources maybe, but probably not sufficient resolve.
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Old 29th January 2021, 10:15 PM   #333
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Originally Posted by dudalb View Post
Thing about selling short..leaving out the ethical questions....is your timing has to be precise and exact; you really do have to know when to fold.
A lot of the Day traders/reddit yahoos are clueless here,which is why they will get soaked.
It works a little like the classic Ponzi/Pyramid scheme; the people who started it and got in early will make money;everybody else will get soaked.
I dislike the big Hedgefunds as much as anybody an if possible I would make selling short illegal (not sure that is feasible) but don't tell me a bunch of yahoos on Reddit are some kind of Heroic Proletarian Resistence to THE MAN when they are bunch of wannabe gamblers
who are not very good at it.
One take away from the sanctification of the day traders I see from many on the left;The left is a prone to fall for the "wisdom of the common man" malarkey as the right is. Populism in any form is poison.
This is one of the most disturbing things about this situation.

I bet you that NONE of the people who were buying Gamestop stocks, or praising this effort to "get back" at Wall Street, actually did any research into the company itself. The fact is that this company deserved to be in the state it was before this stock "pump" occurred.

For example, on YouTube (before the deluge of videos praising this stock "stunt,") the majority of videos on the site concerning the company had to do with all the ways Gamestop had "shafted" their customers & employees. And don't even get me started on their attempts to claim that they were an "essential business" during the worst of the shutdowns that some states had implemented to control the spread of Covid-19.

As well as this, Gamestop's entire business model is in serious danger, as it appears that the major console companies are themselves moving into the same digital distribution model that the Windows, Mac, and Linux gaming communities have largely moved to years ago.

From what I have been hearing these people have also been "pumping" the stocks of companies like the movie chain AMC. Now in that case I might slightly agree with this, as one of the major reason that company is in trouble is due to external forces - mainly the Covid-19 pandemic restrictions that led them to shutting down the vast majority of their multiplexes for months.

But Gamestop -

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Old 29th January 2021, 10:44 PM   #334
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Originally Posted by carlvs View Post
This is one of the most disturbing things about this situation.

I bet you that NONE of the people who were buying Gamestop stocks actually did any research into the company itself. The fact is that this company deserves to be in the state it was before this stock "pump" occurred.
I spoke earlier about a user on Reddit, DFV, who began trading options in GME in September of 2019, way before this event occurred. He disagreed that GameStop was a dying company. He was making money on calls then. He held his position through the pandemic and continued to build the position. He started with $58k and as of today, his postition is worth about $40mil+. Turns out DFV is a former stockbroker or something like that. If you’re interested, he also goes by the name RoaringKitty on YouTube.

You can like GameStop as a company or not, but if you seek out his analysis, you will see that he had some sound reasons for thinking the stock was undervalued. And he was right.

So you are very wrong if you think no one was doing any actual analysis. Michael Burry (of The Big Short fame) came to many of the same conclusions independently and used his hedge fund to by 5% of GME in April 2020.

What happened after all that was crazy, yes, but the fundamental catalyst for it all was the idea that GME was being heavily shorted when a lot of people thought it was actually worth something.
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Old 29th January 2021, 11:11 PM   #335
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Originally Posted by xjx388 View Post
I spoke earlier about a user on Reddit, DFV, who began trading options in GME in September of 2019, way before this event occurred. He disagreed that GameStop was a dying company. He was making money on calls then. He held his position through the pandemic and continued to build the position. He started with $58k and as of today, his postition is worth about $40mil+. Turns out DFV is a former stockbroker or something like that. If you’re interested, he also goes by the name RoaringKitty on YouTube.
Is this "former broker or something" claiming he's turned 58k into 40 mil in 16 months of churning otm gamestop calls? Because I would be highly skeptical of such a claim. Particularly when essentially all of its growth has occurred in one month... when the run on those calls would have been insane. That sounds mighty fishy.
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Old 30th January 2021, 02:45 AM   #336
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Originally Posted by rjh01 View Post
How to make a lot of money fast.
1. Buy a lot of stock in a small company.
2. Go to Reddit and persuade people (suckers) to buy that stock for LOLs.
3. When the price shoots up, sell your stock for a massive profit.

The price of the stock will go down, but it will be the suckers on Reddit who will lose their money.
Exactly this. This is MAGA finance. You just yell "Let's stick it to Teh Elites!!", and a bunch of edgy malcontents will follow. And when they eventually get fleeced, they will blame either something abstract ("The Market", "Wall Street") that largely plays by the book, Jews, whatever - but not the ones who took you for a ride or yourself for being a willing rube.
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Old 30th January 2021, 05:21 AM   #337
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MAGA finance? Or Occupy finance?
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Old 30th January 2021, 06:01 AM   #338
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Originally Posted by theprestige View Post
MAGA finance? Or Occupy finance?
Tell me the difference.
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Old 30th January 2021, 06:24 AM   #339
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Occupy has prior art.
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Old 30th January 2021, 07:09 AM   #340
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I doubt either end of the political spectrum can lay claim to exclusive ownership of human greed and folly. If you think otherwise let me know because I have a truly exciting investment opportunity that will make you rich quickly, and you must be too smart to fall for a scam.
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Old 30th January 2021, 07:34 AM   #341
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Originally Posted by timhau View Post
Exactly this. This is MAGA finance. You just yell "Let's stick it to Teh Elites!!", and a bunch of edgy malcontents will follow. And when they eventually get fleeced, they will blame either something abstract ("The Market", "Wall Street") that largely plays by the book, Jews, whatever - but not the ones who took you for a ride or yourself for being a willing rube.
I have no problem if people want to use the internet to form a defacto short squeeze hedge fund. Retail traders have the same right to use collective leverage to manipulate the market for their own benefit as institutional traders do, not to mention poetic justice. But, as you say, I don't want to hear anti-elitist tantrums when the shorts fight back and the dump phase claims it's victims. As far as the buying restrictions applied by several houses, it's not uncommon at all for that to happen in response to extreme volatility, but pressure from powerful managers almost certainly played a role.
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Old 30th January 2021, 08:12 AM   #342
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Originally Posted by trustbutverify View Post
I have no problem if people want to use the internet to form a defacto short squeeze hedge fund.
Yea, that's not the problem. The problem is total lack of disclosure. That would get a Wall Streeter in trouble, BTW.
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Old 30th January 2021, 08:13 AM   #343
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I’m a little confused about the greedy, fleecing comments. I thought the Redditors were doing this mostly as a pure F U experiment as opposed to thinking they’d all make money on it.

ETA: Is it correct that the only people who will ‘make money’ if they keep it up until the short squeeze is over are the ones whose shares the hedge fund ends up having to buy to fulfill its short? Does the fund get to pick whose shares it buys, or is that just the lowest priced ones on the market when it comes due?

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Old 30th January 2021, 08:28 AM   #344
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There's a conspiracy theory that the redditors have been duped into playing F U games that will end up profiting some other party.
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Old 30th January 2021, 08:39 AM   #345
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Originally Posted by theprestige View Post
There's a conspiracy theory that the redditors have been duped into playing F U games that will end up profiting some other party.
Somebody always figures out a way to profit from everything that ever occurs, which is distinct from planning the thing to begin with.
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Old 30th January 2021, 08:41 AM   #346
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Originally Posted by Lithrael View Post
I’m a little confused about the greedy, fleecing comments. I thought the Redditors were doing this mostly as a pure F U experiment as opposed to thinking they’d all make money on it.
Short squeezes can be very profitable. According to some of the info I've read the Redditors were buying call options (the right to buy the stock at a specified price at a point in the future). These financial instruments vary much more widely in value than the underlying stock, but the excessive options buying caused the stock itself to move, raising the value of the options, resulting in more options buying. In the meantime, the short-sellers were facing margin calls (essentially they were losing lots of money) and thus they had to buy the stock back in order to unwind the short sale, further increasing the price. I'm sure than anybody who bought calls on Gamestop before the runup is now a wealthy person (provided they sell quickly).

The people who will get fleeced are the ones who are attracted to the stock simply because it has made people rich quickly and think it will do the same for them.
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Old 30th January 2021, 08:47 AM   #347
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Originally Posted by TragicMonkey View Post
Somebody always figures out a way to profit from everything that ever occurs, which is distinct from planning the thing to begin with.
I wholeheartedly agree.
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Old 30th January 2021, 09:21 AM   #348
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Originally Posted by Mader Levap View Post
That fabled invisible hand of free market is pretty visible today, indeed. snicker

https://cdn.discordapp.com/attachmen...lmd17obe61.png



No. My argument is that shortsellers have very big financial incentive to be lying scumbags. You are very visibly ignoring moral hazard involved with this activity.
They have the same financial incentive to be lying scumbags about the negative prospects for the stock as the stockholders and management have to be lying scumbags about the positive prospects.
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Old 30th January 2021, 09:23 AM   #349
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Originally Posted by timhau View Post
Exactly this. This is MAGA finance. You just yell "Let's stick it to Teh Elites!!", and a bunch of edgy malcontents will follow. And when they eventually get fleeced, they will blame either something abstract ("The Market", "Wall Street") that largely plays by the book, Jews, whatever - but not the ones who took you for a ride or yourself for being a willing rube.
It's basically a legal kind of Ponzi or Pyramid scheme
What astounds me is how many are portraying the reddit fools as some kind of heroic resistence against "THE MAN".,including many who should know better.Iincluding many, many on the left.
And on some sites I am getting the "I LIKE THE STOCK" posts without any reason as to why Gamespot is a good investment. They are idiots,or they are trying to play the short selling game but don't want to admit it.
I repeat, leaving the morality of short selling aside...and I think it is immoral...it's a game where only expereinced people who know their timing will win,and everyone else loses.
I guess buying and selling Tulips will be the next big thing for these fools.
And don't give me "the collective wisdom of the common man" idiocy. We have seen in the US how well that works.
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Old 30th January 2021, 09:26 AM   #350
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Originally Posted by Brainster View Post
They have the same financial incentive to be lying scumbags about the negative prospects for the stock as the stockholders and management have to be lying scumbags about the positive prospects.
Except that facts and logic indicates that Gamespot is, longterm, a bad investment.Think Blockbuster all over again.
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Old 30th January 2021, 09:27 AM   #351
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I've been trying to figure out if there were a sensible way I could profit from all this debacle. I concluded that there is, but it's exactly the same as what I always do: periodically put a small amount of extra money into Vanguard's S&P 500 mutual fund. I figure all this sudden noise has reminded people the stock market exists, and will create an influx of new investment in everything, which will boost the market overall.
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Old 30th January 2021, 09:28 AM   #352
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Originally Posted by dudalb View Post
It's basically a legal kind of Ponzi or Pyramid scheme
What astounds me is how many are portraying the reddit fools as some kind of heroic resistence against "THE MAN".,including many who should know better.Iincluding many, many on the left.
And on some sites I am getting the "I LIKE THE STOCK" posts without any reason as to why Gamespot is a good investment. They are idiots,or they are trying to play the short selling game but don't want to admit it.
I repeat, leaving the morality of short selling aside...and I think it is immoral...it's a game where only expereinced people who know their timing will win,and everyone else loses.
I guess buying and selling Tulips will be the next big thing for these fools.
And don't give me "the collective wisdom of the common man" idiocy. We have seen in the US how well that works.
You don't have to like clowns to enjoy the spectacle when one gets the duchess in the face with a pie.
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Old 30th January 2021, 09:29 AM   #353
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Originally Posted by Brainster View Post
Short squeezes can be very profitable. According to some of the info I've read the Redditors were buying call options (the right to buy the stock at a specified price at a point in the future). These financial instruments vary much more widely in value than the underlying stock, but the excessive options buying caused the stock itself to move, raising the value of the options, resulting in more options buying. In the meantime, the short-sellers were facing margin calls (essentially they were losing lots of money) and thus they had to buy the stock back in order to unwind the short sale, further increasing the price. I'm sure than anybody who bought calls on Gamestop before the runup is now a wealthy person (provided they sell quickly).

The people who will get fleeced are the ones who are attracted to the stock simply because it has made people rich quickly and think it will do the same for them.
Exactly. Selling SHort is a game for experts, not amateurs, because the timing needed is so precise.
I think Short Selling is basically immoral it's a form of gambling that adds nothing of permanent value to the economy and I think gambling should be confined to lottereis and casinos.....but it's still a game for the experts.
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Old 30th January 2021, 09:32 AM   #354
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Originally Posted by TragicMonkey View Post
You don't have to like clowns to enjoy the spectacle when one gets the duchess in the face with a pie.
I agree, but what cncerns me is the otherwise intelligent people who think this is some kind of rebellion against the evil capitalist rather then an attempt by bunch of inept scammers to make money in a game where only the experienced scammers can win that gets to me.
I hate populism of ANY flavor or right.
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Old 30th January 2021, 09:36 AM   #355
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Originally Posted by trustbutverify View Post
I have no problem if people want to use the internet to form a defacto short squeeze hedge fund. Retail traders have the same right to use collective leverage to manipulate the market for their own benefit as institutional traders do, not to mention poetic justice. But, as you say, I don't want to hear anti-elitist tantrums when the shorts fight back and the dump phase claims it's victims. As far as the buying restrictions applied by several houses, it's not uncommon at all for that to happen in response to extreme volatility, but pressure from powerful managers almost certainly played a role.
This. It's the portrayal of the reddit crew as some sort of brave resistence agains The Man that drives me crazy.
Ah, well. I think Ben Franklin's "A Fool and His Money Are Soon Parted" will once again be vindicated.
I slso note that on other forums. the people cheering this on seem to be very high on "Cool" anti establsihment attitude, and short on facts and logic.
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Old 30th January 2021, 09:41 AM   #356
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Originally Posted by carlvs View Post
I bet you that NONE of the people who were buying Gamestop stocks, or praising this effort to "get back" at Wall Street, actually did any research into the company itself. The fact is that this company deserved to be in the state it was before this stock "pump" occurred.
You realize that probably the majority involved in this are gamers are are intimately familiar with gamestop as a company and the trends by whih videogames are bought and sold.

I'm not saying they dived deep, but the basic analysis you gave about the state of the company would not be news to most people buying GME because of WSB.
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Old 30th January 2021, 09:57 AM   #357
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Originally Posted by Brainster View Post
They have the same financial incentive to be lying scumbags about the negative prospects for the stock as the stockholders and management have to be lying scumbags about the positive prospects.
I consider them worse, since lying about positive prospects cannot harm company in additional way as lying about negative prospects of company can.

Originally Posted by carlvs View Post
I bet you that NONE of the people who were buying Gamestop stocks, or praising this effort to "get back" at Wall Street, actually did any research into the company itself. The fact is that this company deserved to be in the state it was before this stock "pump" occurred.
Then you will lose that bet, since I am sure at least one such buyer know what he is getting into. IMO there are two major kinds of people that bought stock in current brouhaha:
1. Those that want collectively harm financially shortsellers. GameStop was just most suitable for that purpose. Smart part of that kind will know this money is to burn as F U and won't spend too much. Any monetary gains are incidental, since making money is not main purpose of this stunt.
2. Opportunists that realized there is run on stock and want to take their piece of pie. Those will be ones that are left holding bag, if they get out too late.

Neither kind cares about GameStop itself at all. It is not accident, it is by design.
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Old 30th January 2021, 10:48 AM   #358
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Originally Posted by dudalb View Post
Exactly. Selling SHort is a game for experts, not amateurs, because the timing needed is so precise.
I think Short Selling is basically immoral it's a form of gambling that adds nothing of permanent value to the economy and I think gambling should be confined to lottereis and casinos.....but it's still a game for the experts.
It does have some use in stopping death spiral financing. Companies that rely on issuing stock for survival don't deserve to live.
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Old 30th January 2021, 11:15 AM   #359
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Originally Posted by dudalb View Post
Exactly. Selling SHort is a game for experts, not amateurs, because the timing needed is so precise.
I think Short Selling is basically immoral it's a form of gambling that adds nothing of permanent value to the economy and I think gambling should be confined to lottereis and casinos.....but it's still a game for the experts.
There's no logical reason why you should be able to bet on companies you think are well-run and have good prospects, but not bet against companies you feel are poorly run and have bad prospects.
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Old 30th January 2021, 11:21 AM   #360
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Are put options immoral too?
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